Thursday, December 24, 2015

There is a reasonably respectable theory (by comparison with
the universe thereof) which says that stock prices track hemlines (the Go Go 60s
and the grim early ‘70s e.g.) – and randomness is a prime culprit. Another
interesting line up comes from the building of sky scrapers.

Consider

1885 and the first seriously tall edifice… the Home Insurance
Building in Chicago

1907 the stock crash and up goes the Singer Building to lead
the leap skyward

1936 and the depths of depression brings us the Empire State
building (still the optimal height / yield mix)

1970s and the oil shock gave us the World Trade Centre and
Willis Towers

late 1990s and the Asian Financial crisis sees the Petronas
Towers pierce new heights

and the GFC in 2010 produced the record breaking Burj Khalifa
in Dubai

What is tougher to tell is whether the buildings preceded a
crash or were built shortly after in an attempt to inspire confidence. Too few
data points of course (but it’s Christmas).

The worry is that 2018 will see the tallest yet at 1,000m
Kingdom Tower, Jeddah opened. Precursor or sugar high? Clearly a skirt length
prediction called for.